New AIA's · 2020. 10. 21. · [email protected] SARVA RASATMIKA (a treatise for Future officers) AIA's SEPTEMBER 2020 Coverage: MONTHLY CURRENT AFFAIRS SARVA RASATMIKA Sources:

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SARVA RASATMIKA(a treatise for Future officers)

AIA's

SEPTEMBER

2020

Coverage:

MONTHLY CURRENT AFFAIRS

SARVA RASATMIKA

Sources:1. The Hindu

2. The Indian Express

3. Business Standard

4. Live Mint

POLITY

ECONOMY

INTERNATIONAL RELATIONS

DEFENCE

ENVIRONMENT

SCIENCE AND TECHNOLOGY

ART & CULTURE

SOCIETY

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SEPTEMBER

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INDEX1.POLITY

1. Mission Karmayogi .............................................................................................. .. 42. India to empower citizens with control over use of personal data ......................... .. 63. Centre- State Financial Relations in the context of GST ......................................... .. 74. New Grievance Redressal System unveiled in J&K ................................................ .. 85. Rationalize regulatory overlaps to unleash our digital economy ............................ .. 96. Controller General of Accounts & Comptroller and Auditor General ..................... 107. The Three New Labour Bills ................................................................................. 118. TV News Regulation in India ................................................................................ 139. NGO Amnesty International under scanner ......................................................... 1410. Govt. tables bill to amend FCRA .......................................................................... 15

2. ECONOMY

1. RBI moves to ease liquidity further ....................................................................... 172. RBI steps in with measures to cool down rising yields. .......................................... 193. Global Innovation Index ...................................................................................... 204. Auctioning of Minerals ........................................................................................ 215. Solarizing Agri Farms .......................................................................................... 226. Advance Pricing Agreements (APAs) ..................................................................... 237. Stagflation .......................................................................................................... 248. Appreciating Rupee and Inflation ......................................................................... 259. Land Consolidation and Land Reform .................................................................. 2610. PM SVANidhi ....................................................................................................... 2811. Expert Panel to study economic impact of waiving interest .................................... 2912. Matsya Sampada Yojana ..................................................................................... 2913. Data Sovereignty ................................................................................................. 3014. Sugar Industry ..................................................................................................... 3115. Chief Compliance Officer (CCO) ......................................................................... 3316. Global Economic Freedom Index ......................................................................... 3417. Predatory Pricing ................................................................................................. 3418. Ease of Doing Business ........................................................................................ 3619. Govt Database for Informal Workforce ................................................................. 3720. Consumers’ Rights for 24x7 Electricity .................................................................. 3821. Insurance schemes for MSME’s and Dwelling units ............................................... 3922. Country - Of - Origin .......................................................................................... 4023. Missing Middle .................................................................................................... 4124. Expert Committee on Non-Personal Data ............................................................. 42

3. INTERNATIONAL RELATIONS

1. Israeli, US officials in UAE .................................................................................... 432. India in Focus? Beijing plans mega building spree in Tibet ................................... 443. Firing on Lac, A First In 45 Years .......................................................................... 454. Trilateral Dialogue: India, Australia, France ......................................................... 455. India, Japan sign ACSA ....................................................................................... 46

SEPTEMBER


6. OPEC Turns 60 .................................................................................................... 46

7. India, China Agree on 5 - Point Action Plan ......................................................... 47

8. Sell enemy assets worth Rs.1 lakh crore ............................................................... 48

9. Maldives defends ties with India .......................................................................... 48

10. Pre-12,000 yrs: Govt sets up panel to study ‘Indian Culture’ ................................ 48

11. Indus Water Treaty at 60...................................................................................... 49

12. G20 Disagrees on WTO’S Consensus Based Approach ......................................... 51

13. Why are Azerbaijan Armenia fighting again? ....................................................... 52

4. DEFENCE

1. India, Russia to hold naval drills in Andaman sea ................................................. 53

2. Hypersonic cruise vehicle test puts India in elite club ............................................ 53

3. Hybrid Warfare ................................................................................................... 54

5. ENVIRONMENT

1. Project Dolphin ................................................................................................... 56

2. Plea for ‘legal entity’ status to animals................................................................. 57

3. World’s wildlife population down by 68% since 1970 ........................................... 57

4. California wildfires growing bigger ...................................................................... 58

5. Net Zero Carbon Economy by 2050: ETC Report .................................................. 59

6. NGT direction on Najafgarh Jheel ....................................................................... 59

7. China vows to go carbon neutral by 2060 ........................................................... 60

8. Over 380 Whales dead in mass stranding ............................................................ 61

6. SCIENCE AND TECHNOLOGY

1. From billions of years ago, lesson on Black Holes ................................................... 62

2. Russia’s COVID – 19 vaccine ................................................................................. 63

3. NASA set to pay firms for mining resources on Moon ............................................. 63

4. Phosphine on Venus .............................................................................................. 64

5. Vaibhav to be held online ...................................................................................... 64

6. Bamboo shoots can be among cheapest immunity boosters. .................................. 65

7. ART & CULTURE

1. Rare Renati Chola era inscription ........................................................................... 65

2. Ellanthakarai site excavation ................................................................................. 65

3. “Trami” Kashmiri tradition ..................................................................................... 66

8. SOCIETY

1. The gaps in India’s health care digital push ........................................................... 66

2. 40% children not fully vaccinated: NSO Report ...................................................... 68

3. The efficacy of female leadership ........................................................................... 68

SEPTEMBER


1. POLITY

1. Mission Karmayogi Union Cabinet on gave its approval for Mission Karmayogi, a new national capacity building and performance evaluation programme for civil servants.

About the Scheme:

1. Prime Minister’s Public Human Resource Council (headed by PM, Union Ministers, Chief Ministers, eminent public HR practitioners among others) will be set up as the apex body to direct the reforms, with an autonomous Capacity Building Commission to be established to manage the reformed system and harmonise training standards across the country.

2. The scheme will cover 46 lakh Central government employees at all levels and involves an outlay of Rs. 510 crore over a five-year period and annual subscription of Rs. 431 will be charged per civil servant.

3. The scheme was meant to be a comprehensive post recruitment reform of the Centre’s human resource (HR) development.

4. The programme will support a transition from “rules based to roles based” HR Management.

5. It will focus on “functional and behavioural competencies” as well, and also includes a monitoring framework for performance evaluations.

6. Service matters such as confirmation after probation period, deployment, work assignments and notification of vacancies will all be integrated into the proposed framework.

7. The capacity building programme will be delivered through an Integrated Government Online Training or iGOTKarmayogi digital platform, with content drawn from global best practices rooted in Indian national ethos.

8. The programme will help in overcoming existing impediments like “lack of lifelong & continuous learning environment”, “evolution of silos at department level preventing shared understanding of India’s development aspirations” and “diverse and fragmented training landscape” among others.

Key Recommendations of various Civil Service Reforms CommitteeSanthanam Committee, 1964:

· Constitution of the Central Vigilance Commission.

· Suggested that on completing 25 years of service or 50 years of age, a govt. servant may be retired without prescribing any reason.

First ARC, 1966:

· Recognized the need for specialization & laid method of selection.

· Unified grading structure was suggested.

· Lateral entry to technical posts at senior levels.

· A national policy on Civil Service Training to be devised.

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Fifth Central Pay Commission, 1997:

· Advocated the constitution of a high-powered Civil Services Board.

· Recommended fixation of minimum tenure for each post.

· It suggested that no premature transfer should be allowed.

Hota Committee, 2004:

· Use of ICT to be more accessible, effective and accountable.

· Prevention of Corruption Act, be amended to protect honest civil servants from malicious prosecution and harassment.

· Model Code of Governance be drawn up.

Second ARC, 2005:

· Institutional & procedural reforms to ensure stable tenures.

· Assigning specific domains to civil servants early in their career & retaining them in the assigned domain.

· All civil servants undergo assessment of performance and on the basis of such evaluation a civil servant can be retired compulsorily.

· Ministriesresponsible for policy advice should be separated from entities responsible for delivery of services.

o Creating flatter structures with team-based orientation and reduce the excessive degree of central control.

· Devolution of managerial authority with greater flexibility and incentives to achieve results.

· Accountability through agreements with departmental minister specifying the performance targets transparently.

· Declaration of values for the civil services.

o Set up appropriate institutional mechanisms to enforce & monitor the values and code of conduct.

· Legal basis for important public service standards, ethical values and culture be legislated.

Niti Aayog’s Strategy for New India @75 Report:

· Existing 60-plus separate civil services at various levels needs to be reduced through rationalization and harmonization of services.

· Promotion of E-governance and paperless governance for enhanced efficiency, better tracking and improved interface.

· Services be identified for outsourcing on PPP basisto reduce administrative burden.

Way Forward

· Dynamic world requires dynamic changes.

o Rapid and fundamental changes are taking place in the political, economic and technological fields.

o These call for major changes in the civil service along with an environment conducive to innovation and initiative.

· It should align with PM Modi’s clarion call for the civil servants – “Reform, Perform and Transform”.

SEPTEMBER


2. India to empower citizens with control over use of personal data The draft of Data Empowerment and Protection Architecture (DEPA) is released by NITI Aayog and sought suggestions on it before 1st October.

· DEPA is going live in the financial sector in 2020 under the joint leadership of the Ministry of Finance, RBI, PFRDA, IRDAI and SEBI - followed by healthcare and telecom.

· It aims to be a joint public-private effort for a new and improved data governance approach.

Draft highlights –

· DEPA would empower people to seamlessly and securely access their data and share it with third party institutions.

· DEPA’s Institutional Architecture will involve the creation of new market players whose incentives align more closely with individuals: user Consent Managers.

· A private ‘consent manager’ institution will ensure that individuals can provide consent for every granular piece of data shared securely (using newly created standard APIs).

· These Consent Managers in the financial sector will be known as Account Aggregators (AA) and a non-profit collective or alliance of these players will be created called the DigiSahamati Foundation (Shamati).

· DEPA – aimed at inverting the traditional western model, where data is simply used to advertise and sell products, to one where data can be used to empower a billion Indians.

Significance –

· It has greater significance of protecting both the data privacy and user rights in an evolving complex digital world.

· Consented data sharing can reduce cost and risk premium of offering loans to small entrepreneurs by creating frictionless and secure access to data, used to establish creditworthiness, with individual consent.

· Reduce Data silos - By giving more control over users of data and bringing in transparency will help building trust and addressing misuse of data.

· Using DEPA individuals and small businesses can use their digital footprints to access not just affordable loans, but also insurance, savings and better financial management products.

· Reduce NPAs - DEPA will provide a platform to financial institutions to understand borrowers and help them make informed decisions. This ideally should reduce NPAs and make more loans available to small businesses.

SEPTEMBER


3. Centre- State Financial Relations In The Context Of GSTGST:1. Centre and Union government have agreed to give up the right to tax for the purpose of

common good.

2. To make one nation, one tax possible, Centre and State are pooling in the Sovereignty.

A) Main Features Of GST

1. Applicable On supply side: GST is applicable on ‘supply’ of goods or services as against the old concept on the manufacture of goods or on sale of goods or on provision of services.

2. Destination based Taxation: GST is based on the principle of destination-based consumption taxation as against the present principle of origin-based taxation.

3. Dual GST: It is a dual GST with the Centre and the States simultaneously levying tax on a common base. GST to be levied by the Centre is called Central GST (CGST) and that to be levied by the States is called State GST (SGST). Import of goods or services would be treated as inter-state supplies and would be subject to Integrated Goods & Services Tax (IGST) in addition to the applicable customs duties.

4. GST rates to be mutually decided: CGST, SGST & IGST are levied at rates to be mutually agreed upon by the Centre and the States. The rates are notified on the recommendation of the GST Council.

5. Multiple Rates: Initially GST was levied at four rates viz. 5%, 12%, 16% and 28%. The schedule or list of items that would fall under these multiple slabs are worked out by the GST council.

B) Legislative Basis Of GST

1. In India, GST Bill was first introduced in 2014 as The Constitution (122nd Amendment) Bill.

2. This got an approval in 2016 and was renumbered in the statute by Rajya Sabha as The Constitution (101st Amendment) Act, 2016.

Its provisions:

1. Central GST to cover Excise duty, Service tax etc., State GST to cover VAT, luxury tax etc.

2. Integrated GST to cover inter-state trade. IGST per se is not a tax but a system to coordinate state and union taxes.

3. Article 246A – States have power to tax goods and services.

C) GST COUNCIL

Article 279A - GST Council to be formed by the President to administer & govern GST. It’s Chairman is Union Finance Minister of India with ministers nominated by the state governments as its members.

1. The council is devised in such a way that the Centre will have 1/3rd voting power and the states have 2/3rd.

2. The decisions are taken by 3/4th majority.

SEPTEMBER


Trivia: Taxation BeforeGST1. Before introduction of VAT, tax was levied on both input used and output made.

2. This caused tax on tax or multiple taxation.

3. With VAT, this problem of tax cascading was removed, but VAT cannot subsume all tax.

4. Under VAT regime all the goods and services were taxed on differently.

5. Constitutionally services were taxed only by the central government.

4. New Grievance Redressal System Unveiled In J&K Jammu and Kashmir Lieutenant Governor Manoj Sinha launched the Jammu and Kashmir Integrated Grievance Redress and Monitoring System (JKIGRAMS), in a bid to create an interface with the public and focus on governance issues in the Union Territory.

JKIGRAMS:1. JKIGRAMS will be an effective grievance redressal mechanism, which is the life and blood of

any good governance system.

2. The system is being launched on a pilot basis in three districts Jammu, Srinagar, and Reasi and will gradually be rolled out in the remaining districts by October 2.

3. This is the first UT that will be linked to the central government system—CPGRAMS.

4. It will be available round the clock with applicant OTP authentication, acknowledgement to applicant at each stage, feedback by complainant, and grievance submission through call centre

The Mechanism:1. Deputy Commissioners have been placed at the primary level for receiving, disposing of and

monitoring grievances, the J&K administration.

CPGRAMS:1. Centralized Public Grievance Redress and Monitoring System is developed by National

Informatics Centre (Ministry of Electronics & IT [MeitY]), in association with Directorate of Public Grievances (DPG) and Department of Administrative Reforms and Public Grievances (DARPG).

2. The underlying idea was to receive, redress and monitor the grievances of the public.

3. Launched by the Department of Administrative Reforms & Public Grievances (DARPG) under the Ministry of Personnel, Public Grievances & Pensions.

Key Features:1. The CPGRAMS provides the facility to lodge a grievance online from any geographical location.

2. It enables the citizen to track online the grievance being followed up with Departments concerned and also enables DARPG to monitor the grievance.

3. The procedure includes designating a senior officer as the Director of Grievances/Grievance officer in every office to ensure that the system remains accessible, simple, quick, fair and responsive, and fixing the time limit for disposal of work relating to public grievances and staff grievances.

SEPTEMBER


5. Rationalize regulatory overlaps to unleash our digital economy · Technology has catalysed fundamental changes over the last decade, resulting in new digital

channels of creative expression, communication and knowledge formation.

· These developments have precipitated the need for new governance frameworks to guide transitions.

Digital regulators in India – · NPD Authority – a new supervisory body that will enable data sharing and enforce

data request

· Central Consumer Protection Authority (CCPA) – would grant it oversight of digital businesses

· Recent proposals to create a regulator for personal data and e-commerce

· Sector-agnostic anti-trust regulator Competition Commission of India

· Telecom regulator

Issues in India’s Digital Governance – 1. India lacks unified and cogent strategy

Ø For instance - The proposed NPD Authority is expected to supervise data-sharing arrangements between businesses and government.

Ø Similar provision appears in the Personal Data Protection Bill 2019 – section 9 (2) empowers the personal data regulator to provide “any personal data anonymised or other non-personal data”

Ø At the same time, e-commerce regulator proposed under the recent draft e-commerce policy has the same power.

2. Jurisdictional overlaps are seen elsewhere in regulation

Ø The CCPA will oversee misleading advertisements online, as well as the disclosure of personal information to third parties.

Ø The draft of National E-Commerce Policy proposes similar measures.

3. Demarcate supervisory boundaries of government departments also remain ambiguous

Ø For Example – The DPIIT is entrusted with all matters related to e-commerce, as per an amendment to the allocation of business rules in 2018.

Ø However, the administration of the Information Technology Act, 2000, which provides legal recognition to e-commerce, rests with the ministry of electronics and information technology.

Way Ahead –· India requires a “whole of government approach” to rule-making to address institutional

challenges raised by technology. This involves increased dialogue and coherence among government bodies.

· Practices like Multi-stakeholder consultations, promotion of self-regulations by the industry, regulatory impact assessment, international cooperation to address the cross-border dimensions of technology, accountability of new institutions are critical to improve the quality of regulation.

SEPTEMBER


6. Controller General of Accounts & Comptroller and Auditor General

Controller General of Accounts (CGA)· Neither a Constitutional nor a Statutory body - works under Department of Expenditure,

Ministry of Finance.

· Principal Accounting Adviser to Government.

· Responsible for establishing and maintaining a technically sound accounting system.

· It is the apex Accounting Authority of the Central Government and exercises the powers of the President under Article 150 for;

o Prescribing the forms of Accounts of the Union and State Governments on the advice of the Comptroller & Auditor General of India.

o Prepares a monthly and annual analysis of expenditure, revenues, borrowing and fiscal indicators for the Union Government.

· CGA is appointed by the Central Government.

Comptroller and Auditor General of India (CAG)· Independent constitutional body under A. 148 under Part V.

· CAG is the head of the Indian Audit and Accounts Department.

· CAG is the guardian of the public purse and controls the entire financial system of the country at both the levels- the center and state.

· CAG acts as a guide, friend and philosopher of Public Accounts Committee of the Parliament.

· CAG is one among the four bulwarks of Indian Democracy (Supreme Court, UPSC, Election commission being the other three).

· CAG is appointed by President of India by warrant under his/her hand and seal.

· Independence of CAG is ensured by;

o Expenditures charged on Consolidated Fund of India.

o Security of tenure up to 65 years or 6-year term.

§ Removal based on the procedure prescribed, similar to the removal process of a Supreme Court Judge.

o Not eligible for further office.

o Neither remuneration nor service conditions can be altered to his/her disadvantage after appointment.

· Duties and Powers of CAG include;

o Compiling accounts of Union and States.

o Prepare and submit accounts to the President, Governors of States and Administrators of Union territories having Legislative Assemblies.

o Audit of receipts and expenditure of bodies or authorities substantially financed from Union or State Revenues.

SEPTEMBER


7. The Three New Labour Bills· Lok Sabha has passed through a voice vote the three new labour codes introduced in

Parliament on Sep 19th 2020.

· Earlier, in 2019, Labour and Employment ministry has amalgamated various labour laws in the country into 4 labour codes.

o Of the 4, the Code on Wages Bill was passed and became an act in 2019.

o Remaining three were under various stages in Parliament – but were withdrawn and instead replaced with the new labour code bills.

The Code on Social Security, 2019

Standing committee report submitted in Lok Sabha (July’20)

Replaced with The Code on Social Security, 2020

The Industrial Relations Code, 2019

Standing committee report submitted in Lok Sabha (Apr’20)

Replaced with The Industrial Relations Code, 2020

The Occupational Safety, Health and Working Condi-tions Code, 2019

Standing committee report submitted in Lok Sabha (Feb’20)

Replaced with The Occupational Safety, Health and Working Conditions Code, 2020

Certain Positive Aspects across the codes· Lowering of threshold for certain provisions like recognition of trade union for negotiation

(from 75% workers to 51% of workers).

· 2020 Social security code makes provision to register unorganized workers, gig workers and platform workers.

o It also mandates Central government to set up Social Security funds for these workers.

· Increased the ambit of The National Social Security Board to include gig workers and platform workers.

o The Board will recommend, administer and monitor schemes for these workers.

o Scheme funding for gig workers and platform workers will be shared between Center, State and Aggregators. The code provides definition of aggregator (lists 9 categories like ride sharing, food delivery etc.;) and contribution rates by them.

· Authorizes Central Government to defer (or) reduce contribution towards PF and ESI up to 3 months during a pandemic, endemic or natural disaster.

· Fixes the maximum daily work hours to 8 hours per day (2019 bill allowed Government to notify work hours).

· Defines inter-state migrant workers as one who has come on his own from one state and obtained employment in another state, earning up to Rs 18,000 a month. (earlier inter-state migrant worker definition was only based on contractual employment).

· Provides certain benefits for inter-state migrant workers like;

o Availing benefits of PDS, both in native & state of employment.

o Availing benefits of Construction cess fund in the state of employment.

o Insurance and PF benefit available to other workers in the same establishment.

· 2020 Bill requires the central and state governments to maintain or record the details of inter-state migrant workers in a portal.

o An inter-state migrant worker can register himself on the portal on the basis of self-declaration and Aadhaar.

SEPTEMBER


Key Issues across the Three New Codes· Central Government will continue as the appropriate Government, to apply the three labour

bills, even when it is not the majority shareholder of the PSU (holding below 50%).

· Empowers Government to make rules on certain essential aspects, through delegated legislation like;

o Increasing threshold for lay-offs, retrenchment, and closure.

o Setting thresholds for applicability of different social security schemes.

o Specifying safety standards, and working conditions.

· Empowers Government to exempt provisions of the code for any new industries.

Key Issues in the Industrial Relations Code, 2020 · It has increased threshold values for certain mandatory provisions to be followed by

industries like;

o Issuance of standing orders related to work, wages, leave, termination, grievances (from 100 to 300 workers).

o Industry to seek prior Government permission for lay-off (or) retrenchment (from 100 to 300 workers).

o Definition of a factory (with power – from 20 workers to 40 workers; without power – from 10 to 20 workers).

· New code does not have any provisions and is silent on certain aspects;

o Standing orders for industries employing below-threshold workers (2019 code made it a responsibility for Center to issue standing order).

· New code removes certain provisions of 2019 code like;

o Review opportunity for workers against disputes of PF, ESI and amounts due from employers.

o Provision to reopen a dispute to incorporate missed details.

· Reduces the penal provisions in certain cases like;

o Obstructing labour inspected from performing duty –reduced from 1 year to 6 months imprisonment.

o Unlawful deduction of employer contribution will have only a fine of Rs. 50000 (earlier, included a jail term of 1 year).

· Introduces new conditions for carrying out a legal strike.

o Time period for arbitration proceedings has been included as against only the time for conciliation at present.

o This increased the legally permissible time frame before the workers can go on a legal strike.

Key Issues in the Code on Social Security, 2020· Overlapping & unclear definitions of Gig workers and platform workers to avail provisions of

the code.

· Mandates Aadhaar linking to avail social security benefits for inter-state workers.

SEPTEMBER


Key Issues in the Code on Occupational Safety, Health and Working Conditions, 2020· 2020 code allows women to be employed in all establishment for all types of work (2019

code prohibited employment of women for undertaking dangerous operations).

· It has removed the provision to pay displacement allowance to inter-state migrant workers (2019 allowed a payment of 50% of monthly wages).

· 2020 Bill bars civil courts from hearing any matters under the Bill.

8. TV News Regulation in India· There is a huge debate over Quality of Journalism on News Television recently.

o It can be attributed either to the excessive coverage of an actor’s death or the involvement of Supreme Court to issue a restraining order against the telecast of a program in a channel.

Sudarshan TV Case Issue · A program in the channel claimed that a particular minority community is infiltrating the civil

services of the country.

· SC, hearing a petition against the program, said it cannot allow insidious comments in the name of freedom of press that are used to vilify a particular community and disturb the harmony.

Cable Television Network Rules, 1994· Programme code, part of the rules, says that no program should be carried in the cable

service if;

o Offends against good taste or decency

o Contains criticism of friendly countries

o Contains anything affecting the integrity of the Nation

o Denigrates women and children

o Contains attack on religions or communities or visuals or words contemptuous of religious groups or which promote communal attitudes.

o Is likely to encourage or incite violence or contains anything against maintenance of law and order or which promote-anti-national attitudes.

o Contains anything obscene, defamatory, deliberate, false and suggestive innuendos and half-truths.

Multiple Regulatory Bodies, but of limited use!1. News Broadcasting Standards Authority (NBSA)

· National Broadcaster Association (NBA) is a collective representative of the private television news & current affairs broadcasters.

· Currently, it has 26 leading news and current affairs broadcasters as members.

· It presents a unified and credible voice before the Government, on matters that affect the growing industry.

· In, 2007, it has set up a News Broadcasting Standards Authority (NBSA), an independent body to adjudicate upon broadcast complaints.

o In Sudarshan TV case, NBA requested SC to grant recognition to NBSA, so that it can regulate news channels and levy penalties on violation.

SEPTEMBER


2. Broadcasting Content Complaints Council (BCCC)

· Similar to NBSA, Indian Broadcasting Foundation (IBF) has set up the Broadcasting Content Complaints Council (BCCC) as a regulatory body.

Way Forward for Regulation· Media experts are of the opinion that self-regulation is necessary, however, a statute-based

independent authority to oversee the complaints is also necessary.

· In this regard, Advertising Standards Council of India (ASCI) can be quoted as an example.

o Government has provided recognition to ASCI and the rulings of its Complaints Redressal Body is being followed even by non-ASCI members.

· So, giving statutory powers to both BCCC and NBSA by the Ministry of Information and Broadcasting would provide the necessary teeth to the bodies to regulate the sector.

9. NGO Amnesty International under scanner· Amnesty International India has stopped all its work (including letting go of Staffs) in India, as

Central Government has frozen all its bank accounts.

· European Union (EU) has raised concern over the development and hoped that the NGO will be allowed to operate soon.

Amnesty International· It is a London based NGO founded in 1961.

· Objective is to create a world where every person enjoys all of the human rights enshrined in the Universal Declaration of Human Rights (1948) and other international human rights standards.

· It also conducts research, generates action to prevent grave abuses of human rights and demands justice for those whose rights have been violated.

· Amnesty was awarded the Nobel Peace Prize in 1977 for its “Defence of human dignity against torture” and the United Nations Prize in the field of Human Rights in 1978.

Human Rights: Concept· Human rights are based on dignity, equality and mutual respect – regardless of one’s

nationality, religion or beliefs. These are;

o Universal: belong to all of us – everybody in the world.

o Inalienable: cannot be taken away from us.

o Indivisible and interdependent: Governments should not be able to pick and choose which are respected.

o Human Rights can be violated: Although they are inalienable, they are not invulnerable.

o Human Rights are essential: for freedom, justice, and peace.

Foreign Contribution (Regulation) Act & NGOs· Rules of FCRA regulate the funding of NGOs and they fall under Ministry of Home Affairs (MHA).

SEPTEMBER


Objectives of FCRA

· Prohibit acceptance and use of foreign contribution by certain people like Judge, Journalist, candidate for election and so on.

· It regulates the inflow and usage of foreign contribution by NGOs.

Key Provisions related to NGOs

· It permits only NGOs working in cultural, economic, education, religious or social program to accept foreign funding.

· NGO must be registered under FCRA with below conditions;

o NGO must be in existence for at least 3 years.

o It must have undertaken reasonable activity in its field.

o Must have spent at least Rs. 10 lakhs over preceding 3 years.

· Foreign funding from a foreign source is allowed only for a registered NGO.

· Funds received by NGO must be used;

o Only for the purpose for which it was received.

o Funds must not be given or transferred to any entity not registered under the act without prior approval.

o Asset purchased must be in the name of NGO.

· Registered NGO must file an annual report with Government authority on their income and expenditure.

10. Govt. tables Bill to amend FCRA - Government has proposed certain amendments to the Foreign Contribution Regulation Act, 2010.

New amendments:1. Opening a pass-through bank account in a specified branch in New-Delhi

· As of now only 7% of NGOs were registered in Delhi.

· This amendment will require functionaries of about 20,000 NGOs spread across country to come to Delhi to open a pass through bank account.

2. Stopping NGOs from transferring foreign grants to other registered NGOs

· About 46.5% of NGOs did not receive any foreign grants in 2018-2019. Another 41.65 received only upto Rs.1crore of foreign grants.

Issues

a. Retransfers plays an important role in such functionaries.

b. Whereas this new rules highly impacted such NGOs financially.

c. They are now being asked to bear an additional cost of compliance.

SEPTEMBER


3. Lower cap on administrative expenses

· This rule limits use of foreign funds received for administrative purposes from current limit of 50% to 20%

Issues:

a. This is needless micro management and cost structures vary from project to project, NGOs says.

b. It is particularly difficult for NGOs whose work revolves around advocacy rather than projects.

4. Other:

· Aadhaar has been made a mandatory identification document for all the office-bearers, directors and other key functionaries of an NGO or an association eligible to receive foreign donations.

· Includes “public servant” (as defined under the Indian Penal Code) and “corporation owned or controlled by the government” among the list of entities who are not eligible to receive foreign donations.

· NGO or associations will be allowed to surrender its FCRA certificate.

· The Bill also prohibits the transfer of foreign grants received by an entity to a partner organisation or an associated person.

· Foreign contribution can now be received only in an account designated by the bank as “FCRA account” in a branch of the State Bank of India, New Delhi. No funds other than the foreign contribution should be received or deposited in this account.

· Period of suspension of the FCRA certificate extended to more than 180 days.

Issues:· Targeting of civil societies.

· Curtails the ease of doing business of NGO’s.

· PM CARES fund has received exemptions from complying with FCRA provisions when it is headed by Union cabinet members and administered by PMO officials.

· The bill mandates aadhaar card while the Supreme Court has said Aadhaar card is not a mandatory identification card.

· The legislation fails to protect and respect the rights of freedom of association, expression, and freedom of assembly.

About FCRA:· The Foreign Contribution Regulation Act seeks to regulate the acceptance and utilization of

foreign funds by individuals, associations and companies. It also ensures that such contributions do not adversely affect internal security.

· It was first enacted in 1976 and amended in 2010.

· Nodal Ministry: Ministry of Home Affairs.

· NGO’s and other organisations that are eligible for foreign funding should register themselves under FCRA.

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· Registration is valid for 5 years and it can be renewed subsequently.

· Those who are prohibited from accepting foreign contribution include:

Candidate contesting an election

Cartoonist, editor, publishers of registered newspaper

Judge

Government servants or employee of any corporation

Member of any legislature

associations or companies engaged in the production or broadcast of audio news, audiovisual news, or current affairs programs

2. ECONOMY

1. RBI moves to ease liquidity further Considering the rising yields on government securities, the RBI has announced more measures (special open market operations) to ease liquidity pressure.

Measures proposed:1. Open Market Operations (OMOs):

OMOs amounting to Rs.20, 000 crore will be conducted in two tranches in September.

Further OMOs will be conducted based on market conditions.

2. Statutory liquidity Ratio (SLR):

Banks were allowed to hold fresh acquisitions of SLR securities acquired from September 1 under Held-To-Maturity up to an overall limit of 22% of net demand and time liabilities up to March 31, 2021.

3. Term repo operations for an aggregate amount of ₹1 lakh crore at floating rates: Banks may reduce their interest liability by returning funds taken at the repo rate prevailing at that time (5.15%) and availing funds at the current repo rate of 4%.

Significance of the measures:

· This announcement is made at a time when the GDP has contracted to a record 23.9% with fiscal deficit numbers (estimated: 7-8%) exceeding 100% of that budgeted (3.5%) for fiscal 2020-21.

· In spite of all this, stabilizing food and fuel prices, moderating cost push factors, appreciation of rupee are indicators of contained imported inflationary pressure.

OMOs: · Simultaneous sale and purchase of government securities via auctions.

· Carried out by the RBI, to raise money for the government or control/increase money supply in the economy.

· When the central bank wants to infuse liquidity into the monetary system, it will buy government securities in the open market.

o This way it provides commercial banks with liquidity.

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· In contrast, when it sells securities, it curbs liquidity.

o Thus, the central bank indirectly controls the money supply and influences the short-term interest rates.

· In India, after the economic reforms of 1991, the OMO has gained more importance than the CRR (cash reserve ratio) in adjusting liquidity.

SLR:· SLR is the minimum percentage of deposits or reserve that a commercial bank has to

maintain in the form of liquid cash, gold or other securities.

· The SLR is fixed by the RBI and is a form of control over the credit growth in India.

· The government uses the SLR to regulate inflation and fuel growth.

· Increasing the SLR will control inflation in the economy while decreasing it will cause growth in the economy.

· The SLR was prescribed by Section 24 (2A) of Banking Regulation Act, 1949

Impacts of Ease in Liquidity1. Fall in short-term borrowing cost

· RBI’s liquidity supporting measures and bond yields have caused the short-term borrowing rates to go below the overnight repo rate (4 percent).

2. Private and government entities:

Considering the slump in the economy they are avoiding long-term corporate bonds.

Managing using the working capital raised from the bond market at ultra-low rates.

Have managed to borrow at rates way below the MCLR (6.67-7.10) for short tenors (3 months).

3. Banks:

Currently maintaining a liquidity surplus of Rs.7 trillion,

But looking for safe bets and therefore not ready to provide loans to low-rated firms.

Parking all the excess funds with RBI.

Since, markets are accessible only to top rated firms (AA and above), banks are the only viable option for many.

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2. RBI steps in with measures to cool down rising yields.Context:RBI has undertaken a number of measures that would boost demand for government bonds, keep yields under check and improve liquidity in the system.

Measures Taken:1. Stepping in to boost demand for government bonds, the central bank increased the held-to

maturity (HTM) limit of banks substantially.

2. Banks are supposed to maintain a quarter of their overall bond holdings in the HTM category.

Held-To-Maturity (HTM):1. Held-to-maturity (HTM) securities are purchased to be owned until maturity.

a. For example, a company’s management might invest in a bond that they plan to hold to maturity.

2. There are different accounting treatments for HTM securities compared to securities that are liquidated in the short term.

Yield of A Bond:1. The yield of a bond is the effective rate of return that it earns.

a. But the rate of return is not fixed it changes with the price of the bond.

2. Every bond has a face value and a coupon payment (except zero coupon bonds).a. There is also the price of the bond, which may or may not be equal to the face value

of the bond.

2. Suppose the face value of a 10-year G-sec is RS. 100, and its coupon payment is RS. 5.

a. Buyers of this bond will give the government RS. 100 (the face value);

b. In return, the government will pay them RS. 5 (the coupon payment) every year for the next 10 years and will pay back their RS. 100 at the end of the tenure.

3. In this case, the bond’s yield, or effective rate of interest, is 5%.

a. The yield is the investor’s reward for parting with RS. 100 today, but for staying without it for 10 years.

Operation Twist:1. ‘Operation Twist’ is when the central bank uses the proceeds from the sale of short-

term securities to buy long-term government debt paper

a. This leads to easing of interest rates on the long term papers.

2. Operation Twist first appeared in 1961 as a way to strengthen the U.S. dollar and stimulate cash flow into the economy.

3. In June 2012, Operation Twist was so effective that the yield on the 10-year U.S. Treasury dropped to a 200-year low.

3.

4.

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3. Global Innovation IndexContext· World Intellectual Property Organization (WIPO), Cornell University and INSEAD

Business School has released the 13th edition of Global Innovation Index (GII), 2020.

· GII-2020 is dedicated to the theme “Who will finance Innovation?”, as it evaluates innovation performance of 131 countries and economies around the world.

· The report is published annually and has 80 indicators.

India Specific Findings· India has improved 4 places to be ranked at 48, compared to 2019.

· This improvement has made India;

o Third Most-Innovative lower middle-income economy in the world (Vietnam at 42 and Ukraine at 45 are the first two).

o Highest rank in the Central and Southern Asia region.

o For the 10th consecutive year, India is an innovation achiever

Improvements Made Lags InPillars Indicators Pillars

Institutions (77 to 61)

· Political & operational stability

· Government Effectiveness

· Ease of resolving insolvency

Human capital & research (lost 7 places)

Business Sophistication (65 to 55) · Expenditure financed by business Infrastructure

Creative Outputs (78 to 64)· Cultural & creative services

· Global brandsIP payments (29 to 27)Research talent (46 to 38)

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· Gross domestic expenditure on research and development (GERD) in India accounts for 2.9% share in the world.

o It has increased to $63.2 billion in PPP terms in 2017–2018.

· GERD in India is mainly driven by the government sector;

o 45.4% by the Central Government

o 41.4% by the Industries (36.8% by Private, 4.6% by PSUs)

o 6.8% by higher education sector

o 6.4% by the State Governments

4. Auctioning Of MineralsContext· Union Government has asked for suggestions from industry stakeholders to enhance private

investment in mining sector, under Atmanirbhar Bharat Scheme.

· However, the industries are divided on the provision of auctioning of minerals provided under Mines and Minerals (Development and Regulation) act (MMDR).

o One section is lobbying to continue with mine auctioning process, as it can help industries to reduce costs and have a competing price for minerals.

o Whereas, Industry bodies are lobbying to have private involvement in mine exploration process.

§ This can help overcome the limited public fund available with Government to undertake exploration.

§ Further, the exploring party can sell rights of mining, which can increase investment into the sector.

Mining: Constitutional Provisions· Central Government is the owner of the minerals underlying the ocean within the

territorial waters or Exclusive Economic Zone.

· State Governments are the owners of minerals located within their respective boundaries.

· Entry 54 of Central List: Regulation of mines and mineral development in the public interest falls under Entry 54 of Union List.

o Central Government has framed the Mines & Minerals (Development and Regulation) (MMDR) act, 1957.

· Regulation of mines and mineral development also falls under Entry 23 of State List (subject to the provisions of List I with respect to regulation under control of Union).

Provisions of Recent Amendment in MMDR Act and Coal Mines (Special Provisions), Act· Removal of restriction on end-use (own consumption, sale) of coal by Companies.

· Companies need not possess any prior coal mining experience in India, to participate in the auction of coal and lignite blocks.

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· Currently, separate licenses are provided for prospecting and mining of coal and lignite, called prospecting license, and mining lease, respectively.

o Prospecting includes exploring, locating, or finding mineral deposit.

o Act adds a new type of license, called prospecting license-cum-mining lease.

§ This will be a composite license providing for both prospecting and mining activities.

· Holder of reconnaissance (preliminary prospecting of a mineral) can apply for a prospecting license cum mining lease.

· Under the MMDR Act, mining leases for specified minerals (minerals other than coal, lignite, and atomic minerals) are auctioned on the expiry of the lease period.

· Act provides that state governments can take advance action for auction of a mining lease before its expiry.

5. Solarizing Agri Farms

India’s schemes in Solarizing Agri farms – · India has embarked on its own version of

“solarizing” agricultural farms, and this could possibly change the dynamics of the whole power sector.

· The ambitious programme for solar farms involves multi-GW installations via the PM-Kusum scheme.

o Which targets 3.5million solar pumps across the country (of which 1.5million would be grid-connected), as well as installation of small solar plants (up to 2 MW) on the edge of farms, on barren/fallow land supported by subsidies.

· Most farmers in India get subsidized power, which is priced at a fraction of the cost of supply

· A proposal to set up and manage solar power plants in the state with batteries and street lighting for 25 years at a compelling tariff has been put forward by Energy Efficiency Services Ltd.

· In Andhra Pradesh the government plans to develop 10000MW of solar capacity “to meet the requirements of agriculture sector, for which the government has promised to provide 9 hours of free power per day entirely during day time,” without adding to the burden of the state distribution companies.

Additional Notes:1. PM KUSUM –

· Ministry of New and Renewable Energy has launched the Pradhan Mantri KisanUrja Suraksha evumUtthanMahabhiyan (PM KUSUM) scheme for farmers for installation of solar pumps and grid-connected solar and other renewable power plants in the country.

· It consists of 3 components –

Ø Component A – 10,000 MW of decentralized ground mounted grid connected renewable power plants.

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Ø Component B – Installation of 17.50lakh standalone Solar Powered Agri pumps.

Ø Component C – Solarization of 10 lakh Grid-connected Solar powered Agri pumps

All these components combined the scheme aim to add a solar capacity of 25,750MW by 2022.

2. Atal Jyoti Yojana (AJAY) [phase -2] –

· Installation of 3,04,500 Solar Street Lights (SSL) in the states of - UP, Bihar, Jharkhand, Odisha and Assam (also were covered in phase1), Hilly state of Jammu and Kashmir, Himachal Pradesh and Uttarakhand, North Eastern States – Sikkim, Islands of Andaman & Nicobar and Lakshadweep, Parliamentary constituencies covering 48 aspirational districts of States other than those covered in above mentioned states.

3. Agro voltaic or Agro PV installation – it involves solar panels at a height of a few meters from the ground sheltering crops underneath

· Thus same piece of land produces a crop and power.

· A solar panel can be a good friend to a specific kind of shade-loving crop

6. Advance Pricing Agreements (APAs)

Context· Disruption due to COVID and subsequent disruption, alteration of supply chains

& business models has led MNCs to request Income Tax (I-T) department to modify Advance Pricing Agreements.

· I-T authorities may consider APAs on case-to-case basis for modification, provided companies have documented the changes.

o Changes are in the form of relocation/ redeployment of assets of the company, supply chain structure.

Transfer Pricing· It happens when two related companies (part of the same multinational group) engage in

a trade with each other and establish a price for such a transaction.

o E.g. Amazon’s USA office (A) has bought a packing device. Amazon’s India office (B) is looking to buy the same packing device – so A transfers the device to B at a cost known as “Transfer Pricing”.

· To arrive at the pricing, companies use “Arms-Length Price” (ALP), which will be the price paid by B, if it purchases the device from the market.

Advance Pricing Agreements· It is an advance understanding between a taxpayer and the tax authority on transfer-

pricing methodology and ALP.

· It is voluntary & will supplement Double Taxation Avoidance Agreement (DTAA) for resolving transfer pricing dispute.

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· APAs, in India was launched in 2012 through Finance Act.

· Signed by Central Board of Direct Tax (CBDT), under Finance Ministry.

· It can be a unilateral agreement between the company & CBDT or a bilateral agreement involving a foreign country.

· Once entered it will be binding on the payee as well as CBDT.

Merits of having an APA:· Shows Govt’s commitment for a cooperative tax regime.

· Provides tax certainty to the MNCs in India for 9 years maximum.

· Reduces risk of double taxation through bilateral APAs.

· Avoids the risk of audit & dispute over transfer pricing.

Saves time consuming litigation over disputes, this reducing compliance costs also.· Reduces the record keeping efforts, as taxpayer knows

in advance the records as per the agreed terms of the agreement.

7. StagflationContextVarious economists have cautioned Government & RBI, to ensure their policies don’t lead to a situation of Stagflation.

Stagflation· It is a situation of slow/stagnant economic growth,

high unemployment along with a rise in inflation.

· In India, the three conditions seem to be met;

o GDP has contracted by 23.9% (1st quarter of FY2020).

o Job losses due to COVID lockdown (ILO estimates a loss of 4.1 to 6.1 million jobs).

o CPI has breached the inflation target buffer of 6%.

· It is a contradictory situation – as inflation is not supposed to happen in a weaker economy.

o Slow growthleads to drop in demand, which keeps price at control – reducing inflationary trend.

Reasons for Stagflation in India· Decline in economic activity as seen in degrowth of IIP, Index of Eight core industries.

o This can be due to lower demand (both globally & locally) due to COVID shocks, protectionist trends worldwide, economic tensions between China-USA.

· Supply side constraints leading to inflation.

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o Logistical challenges, during lockdown, led to increase in costs (inflation).

o Increase in tax rates on petrol & diesel, added to logistical costs, further increasing inflation.

· Increased money supply in economy, due to decreasing benchmark policy rate (repo rate) by RBI.

o But money supply has increased without significant spending (or) investment.

o This has led to increase in price rise, as money tend to depreciate.

o Any further fiscal and monetary stimulus (expansionary policies) in an inflated economy, can further increase inflation.

8. Appreciating Rupee And InflationContext· Foreign currency reserves (Forex) of India have reached an all-time high of

$541 Billion.

o Increase in Forex has led to appreciating of Indian Rupee.

· RBI has stated that this currency appreciation can help to contain the imported inflationary pressures.

Fundamental Weakness of our Forex· Our Forex has increased due to;

o Foreign currency borrowing made by RBI.

o Sale of shares of India Inc (invested by FPIs).

· Thus, our Forex is made up of opportunistic flows, rather than permanent surplus.

o Forex can reduce significantly, if FPIs withdraw their investments (Capital flight).

· Further, forex has been used to pay consumption-based imports (mainly oil and gold) rather than durable capital-based investments (like FDI which can increase jobs, domestic output, technical capability).

· Thus, quality of Forex is weak, as it’s mainly made up of opportunistic, reversible flows.

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Appreciating Rupee· RBI’s models indicate that for every 5% appreciation of Rupee, the inflation reduces

by a mere 0.2%.

· A further appreciating Rupee, can lead to;

o Decrease in competitiveness for exporters.

§ Real Effective Exchange Rate (REER) points out that Rupee is being overvalued.

· It can encourage imports (due to being less expensive compared to domestic products) when our consumption increase as our economy wakes from COVID lockdown.

o This would severely impact domestic production, as their costs are higher compared to the cheaper imports.

· Increase in currency inflows, may reduce short-term rupee interest rates.

o This could discourage investors to invest in rupee assets – since their earnings/ profit won’t be significant enough.

9. Land Consolidation and Land Reform

· Three decades ago, the issue of land and consequently land reforms used to be an important topic.

· Where as in last 15 years, there has not been much serious discussion about land, other than land acquisition and computerization of land records.

Concerns on uneven distribution of lands –· Fragmented and uneven distribution of landholding are the root cause for all farm

related issues like –

o rural debt waivers, farmers’ agitations, farmers’ suicides, migration and reverse migration in the wake of COVID-19.

· The average holding size in 1970-71 was 2.28 Ha, which has come down to 1.08Ha in 2015-16.

o The holdings are much smaller in densely populated states like Bihar, West Bengal and Kerala.

· Even these holdings are not in one chunk but in multiple sub-parcels located at different places in a village.

o The multiple subdivisions across generations have reduced the sub parcels to a very small size.

Problems on holding small parcel of lands –Ø Not economic for the holders to invest in wells or tube-wells

Ø Unable to raise plantations since the size is not substantial for them to invest in ancillary works like drip irrigations

Ø Also, difficult to dispose the land to the buyer since they find it difficult to deal with so many landholders.

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Whether land consolidation indeed constitutes land reform?In a study by Philip Oldenburg, titled “Land Consolidation as Land Reform, in

India,” this issue was conclusively settled.

In India and several other countries, consolidation indeed constituted a reform.

· He argued that it helped

o farmers to make investments

o enabled roads and irrigation channels to be laid

o reduced litigation

o allowed farmers to formalize informal partitions

o reduced inequality in landholdings to some extent

o enhances their autonomy and by all measures

o increased production and productivity.

Land Consolidation in India -· The work of consolidation has long been in operation and considerable progress has

been made in some states.

· As much as 120 lakh Ha had been consolidated by the end of the 4th plan, while 440 lakh Ha was consolidated by the end of 5th plan.

o Punjab and Haryana have almost completed the work of consolidation of landholdings.

· The 6th five-year plan had targeted the completion of consolidation in 10 years.

o During its period, only 64.75 lakh Ha of land was consolidated.

· Progress was not uniform across the states.

o Rajasthan, Andhra Pradesh, Kerala and Tamil Nadu and other southern states have not been begun the task.

Why Land Consolidation is need of an hour?· It has now been well established that non-farm sector employment contributes about

60% to the household income in rural areas

· Therefore, policies conducive for the promotion of sectors such as small industries, education, health and other service enterprises need to be made

· Only consolidation can open these avenues for rural areas as large, consolidates holdings would make it easy for the government or private enterprises to acquire land, and for public agencies to lay the road, pipeline or electric supply.

· Also, NITI Aayog and several sections of industry argued that land leasing should be adopted on a large scale to enable landholders with unviable holdings to lease out land for investment, thereby enabling greater income and employment generation in rural areas.

o This cause would be facilitated by the consolidation of land holdings.

But the concern is consolidation does not figure on the agenda of the states.

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Way ahead – · Giving its benefits in terms of enabling more investment, reducing litigation, facilitating the

setting up of new institutions and enterprises, the country must make this as important part of development and factor reforms agenda.

· It also includes those states where consolidation was done 2-3 generation ago, as the need for another round of de-fragmentation has also been felt there. This should be liberally supported by the Centre.

10. PM SVANidhi

ContextGovernment of India has launched PM Street Vendors AtmaNirbhar Nidhi (PM SVANidhi), a micro credit scheme

PM SVANidhi1. The Ministry of Housing and Urban Affairs (MoHUA) has launched Pradhan Mantri Street

Vendors AtmaNirbhar Nidhi (PM SVANidhi), for providing affordable loans to street vendors.

2. The scheme would benefit vendors, hawkers, thelewale and people involved in goods and services related to textiles, apparel, artisan products, barber shops, laundry services etc. in different areas.

Loan Facility:1. The vendors can avail a working capital loan of up to RS. 10,000, which is repayable in

monthly instalments within a year.

2. The loans would be given without collateral.

3. It is for the first time that Microfinance Institutions, Non-Banking Financial Company, Self Help Groups have been allowed in a scheme for the urban poor due to their ground level presence and proximity to the urban poor including the street vendors.

4. There will be no penalty on early repayment of loan.

5. Early repayment (or resettlement) is a clearance of debt or loan before the scheduled time.

a. Many banks and lenders charge penalties for repaying loans early.

6. Those who were vending till 24th March, 2020 can avail the benefits of the scheme.

7. This is for the first time that street vendors from peri- urban/rural areas have become beneficiaries of an urban livelihood programme.

8. The scheme is valid until March 2022.

Interest Subsidy:1. On timely/early repayment of the loan, an interest subsidy of 7% per annum will be

credited to the bank accounts of beneficiaries through direct benefit transfer on a six-monthly basis.

2. The scheme provides for the rise of the credit limit on timely/ early repayment of loans i.e. if a street vendor repays the instalments on time or earlier, he or she can develop his or her credit score that makes him/her eligible for a higher amount of term loan such as RS. 20,000.

3. Urban Local Bodies (ULBs) will play a pivotal role in the implementation of the scheme by ensuring to target the beneficiary and reaching to them in an efficient manner.

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11. Expert Panel To Study Economic Impact Of Waiving InterestContext· An Expert Committee, headed by former CAG Rajiv Mehrishi, has been constituted

by Government.

· Committee will help Government to decide in an informed manner about the terms mentioned in the ongoing Supreme Court case Gajendra Sharma (vs) GOI.

o Petitioners seek waiver of interest and interest on interest on the loan moratorium provided by Government as part of COVID relief package.

Terms of Reference· Measuring the impact on the national economy and financial stability of waiving of

interest and waiving of interest on interest on the COVID-19 related moratorium.

· Suggestions to mitigate financial constraints of various sections of society in this respect and measures to be adopted in this regard.

· Any other suggestions/observations that may be necessary.

· Committee is required to submit its report within a week.

Loan Moratorium· RBI allowed lenders to grant a loan moratorium for 3 months (1st March to 31st May, later

extended to 31st August) on payment of EMI (equated monthly installments).

o This move was to help public who faced job loss (or) pay-cut during COVID lockdown and to self-employed.

o This was to defer the repayment to ensure people have working capital – but not to waive the interest in entirety.

· Missing an EMI payment would lead to adverse action by banks, which will impact the Credit score of a borrower.

12. MatsyaSampada YojanaContext:Prime Minister digitally launched the PM MatsyaSampada Yojana,e-Gopala App& several initiatives linked to studies and research in fisheries production, dairy, animal husbandry and agriculture in Bihar.

PM MatsyaSampada Yojana –

· This is the 1st such comprehensive plan to promote fisheries in the country.

· It is being launched in 21 states of the country with an investment of Rs.20000crores which would be spent in the next 4-5 years.

· The Goal is to double fish exports in the coming 3-4 years.

· Under this scheme the fish producers will get new infrastructure, modern equipment and new markets will be provided.

· This will increase earning opportunities through farming as well as other means.

· PM also referred Mission Dolphin and the positive impact of rearing dolphins on fishery.

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E-GOPALA App – · It will provide information “related to cattle care, from productivity to its health

and diet”.

· The app will enable cattle owner to buy and sell animals.

· Also, PM said the Centre was looking at taking IVF technique in rearing calves to every village.

13. Data Soverignity Context The government–appointed committee for non-personal data governance, which released its draft report in July, has called out such systematic flaws.

Need for a Committee:

· Existing data governance policies are driven by a market-centric approach, based on the concept of data ownership, and treat data as property.

· This leads to concentration of profits and power in the hands of a few tech players.

· But there are 3 main areas that require pragmatic rethink –

ü Business implications related to incentives for innovation and compliance burden

ü Need for a policy framework for data trusts

ü Adopting a practical approach to value of data

1. The Committee should reconsider mandatory data sharing across all sectors

Ø This will distort the business incentive structures, create a first-mover disadvantage and raise the compliance burden.

· For instance – a startup that has invested in drones to collect data about soil and farm conditions to provide crop insurance services. It will need to report all its meta data on public platform.

· Another new entrant can ask for access to all the raw data for free, without making any infra investments.

· Such an outcome is likely to upend the incentives for innovation.

Ø Also, regulatory burden is likely to increase with the need for extensive reporting and responding to data requests.

Recommended solution –

1. The goal of data sharing for public interest can be met by creating a bottom-up, narrow and well-defined framework for who gets access to what type of data and why.

2. Legislation for portability for data-similar to mobile number portability can help aid competition and incentivize innovation, without imposing high costs.

2. The report introduces the concept of trustees and data trust without clearly defining the role, accountability and legal basis of such institutions.

Recommended solution – The committee should recommend sandbox experiments at academic centre that can help create policy and tech framework for data trusts.

· These steps can fast track creation of data trusts with a solid foundation based on practical learning.

3. The committee’s conclusions on valuation of data are inconsistent and unnecessary.

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· The report rightly reasons the theoretical and empirical framework for value of data is untested and complex.

· Yet, it has recommended creation of a digital marketplace to discover a fair price of data.

· This does not adequately account for costs of liabilities such as re-anonymization and privacy breach.

· Similarly, the recommended compensation on the basis of FRAND (fair, reasonable, and non-discriminatory) is not tested methodology for data market; the standards, comparisons and jurisprudence to determine this compensation is sketchy.

Way ahead –India’s goal of unlocking of non-personal data can benefit from transparent consultations on foundational questions related to value of data, incentives in data markets, competition laws, role of trusteeship, data trusts, communities and a framework for prioritization of public interest use cases.

14. Sugar IndustryContextDues pending for sugarcane procurement from farmers (by sugar mills) are on increase. Currently, it stands around Rs. 16,000 crores.

Reasons behind Increasing Dues to Farmers1. Mismatch between cost of production and price at which sugar is sold in the markets.

o Average cost of production is around Rs.35 to 36 whereas the market price realization is around Rs. 32.35 per kg.

o This impacts the earnings and cash flows of sugar mills, which in turn affects the payment made to farmers.

o Recently, NITI Aayog has suggested to increase the minimum sale price by Rs. 2 per kg to Rs. 33, a demand made by the sugar mills also.

2. Increasing dues of sugar mills, causing mismatch in cash flows.

o Payment to sugarcane farmers are made during harvest season (5 months), whereas sugar mills have to realize this cost by selling sugar over a long period of 15 to 18 months.

Ø This causes constraint in their day-to-day working capital.

o Mills approach banks to finance their working capital, but the latter is risk averse to lend to these mills.

o This leads to less payout to sugarcane farmers as well results in poor balance sheets of sugar mills.

3. Delay, from Government side, on payment of sugarcane subsidy to mills – causes delay (or) less payment made to farmers by the mills.

o Subsidies are for unsold buffer stocks, export subsidies, interest subvention on soft loans.

o They range close to Rs. 9,500 crores (both Center & State put together).

o Way-out could be either to get a supplementary grant to clear dues (or) to increase the MSP of sugar by Rs. 2 per kg.

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4. Conflict of intresto Observers point out that sugar mills withhold sugarcane payments on purpose so

that farmers protest which will result in Government providing further concessions and rebates.

Extended ReadingSugar Industry: Stats

· India is the 2nd largest sugar producing country worldwide (1st is Brazil).

· Sugar was the 6th highest export commodity of India in 2018-19 (as per Economic Survey) in terms of value

o Top 5 commodities are Basmati Rice, Spices, Other rice varieties, cotton, oil meals.

· Top 3 states producing Sugarcane in India are Uttar Pradesh, Maharashtra and Karnataka.

Sugarcane Crop· Sugarcane is a tropical as well as a subtropical crop.

· In India, sugarcane is a Kharif crop.

· It needs hot and humid climate

o Average temperature of 21 to 27 degree Celsius

o Rainfall of 75 to 150 cm (irrigation for low rainfall areas).

· Best soil for sugarcane is deep rich loamy soil – neither too acidic nor too alkaline.

· Soil must be rich in nitrogen, calcium and phosphorus.

Sugarcane Pricing in India· Sugarcane prices are determined by both Central Government and State Government.

o Fair and Remunerative Prices (FRP) are announced by Cabinet Committee on Economic Affairs (CAEA) of Central Government, on recommendation of Commission for Agricultural Costs and Prices (CACP).

o State Advised Prices (SAP) are announced by sugarcane producing states, which is usually higher than FRP.

· FRP depends on cost of production, trend of prices, supply-demand trends, price recovery, impact on consumers.

· FRP is the minimum price at which sugarcane is procured by sugar mills from farmers.

o It is regulated through Sugarcane (Control) Order, 1966.

o FRP is to be paid by mills within 14 days of purchase, failing which they have to pay an interest of 15% per annum.

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15. Chief Compliance Officer (CCO) Context· RBI has laid down new guidelines for appointment of Chief Compliance Officer (CCO) in

banks to ensure a uniform approach towards compliance and risk management process.

o Banks having a CCO currently, have to follow the guidelines to appoint a new CCO (or) reappoint the current CCO within 6 months.

New GuidelinesIt covers compliance policy, tenor and appointment of CCO, reporting requirements, duties and responsibilities of CCO.

1) Compliance Policy

· Compliance Policy must be reviewed at least once in a year.

· Bank shall lay down a board-approved compliance policy.

· It should clearly mention the compliance philosophy, expectations on compliance culture and accountability.

· It should include incentive structure, challenges of compliance function, role of CCO, process for identification-assessment-management and reporting on compliance risk.

· Policy should reflect the size, complexity and compliance risk profile of the bank.

· Bank shall also develop and maintain a quality assurance and improvement program covering all aspects of the compliance function.

§ This is to be reviews once in 3 years.

2) Chief Compliance Officer (CCO)

· CCO shall be a senior executive of the bank (in rank of General Manager) or can be recruited from the market.

· Minimum fixed tenure of 3 years, with maximum age of 55.

· CCO shall have an overall experience of at least 15 years in the banking or financial services, out of which minimum 5 years shall be in the Audit / Finance / Compliance / Legal / Risk Management functions.

· CCO will not have any business targets – this is to avoid conflicts of interest (Dual Hatting).

· CCO directly report to MD/CEO/ Board of the bank.

· Appointment, transfer, removal of CCO have to intimated to RBI’s Department of Supervision.

SEPTEMBER


16. Global Economic Freedom IndexContext:India slipped 26 places to 105 among 162 countries and territories on the index of global economic freedom, according to the Economic Freedom of the World: 2020 report released by the Fraser Institute in Canada.

Key Highlights:· India performed worse in terms of size of

government, regulations and the freedom to trade internationally.

· India marginally improved its position in areas of ‘legal system and property rights’ and ‘sound money’.

· Top ten countries in 2020 index - Hong Kong, Singapore, New Zealand, Switzerland, US, Australia, Mauritius, Georgia, Canada and Ireland

· China ranked worse than India overall and was positioned at 124 on the index.

o It performed better than India in terms of its freedom to trade internationally, scoring 112th rank in this indicator.

About the report - · The report measures the ‘economic freedom’, or the ability of individuals to make their own

economic decisions in a country, by analyzing policies and institutions of these countries

· It does so by looking at indicators like regulation, the freedom to trade internationally, size of government, property rights, government spending and taxation.

· In India the report was co-published by Delhi-based Centre for Civil Society.

· India was ranked 79th in its previous edition of this report.

· Since 2020 report uses data from 2018 as the latest year of comparable statistics, newer restrictions on international trade, tightening of the credit market due to NPAs and the impact of Covid-19 on debt and deficits were not reflected in India’s Score.

o So, the turmoil in Hong Kong in 2019 and 2020 may have a negative impact on its score.

17. Predatory PricingContext:India is trying its leadership position in the active pharmaceutical ingredient (API) market which it lost to a particular country (China) due to ‘predatory pricing’ said Finance Minister.

News Highlights:· In bulk drug export, India has led the way for the last 10 years.

o India used to produce its own API till 1970s

· Gradually through predatory pricing, this API production slipped out.

· India’s API imports stand at around $3.5billion per year, and around 68% or $2.5billion come from China.

· Now India is trying to regain its position in API market.

· It would also look at increasing the manufacturing of basic diagnostics and medical testing equipment domestically.

SEPTEMBER


Self-reliance in pharmaceuticals – · As a push towards self-reliance in pharmaceuticals, the government has in the last few months

announced measures to incentivize production of various essential drug ingredients.

· This includes calls to set up bulk drug parks as well as a Production-Linked Incentive (PLI) scheme to build self-reliance in over 50 critical active pharmaceutical ingredients, including penicillin G, vitamin B1, dexamethasone, meropenem, atorvastatin and aspirin.

· Other options like a potential hike in import duties on some of these APIs were also being studied to help domestic bulk drug firms compete with cheaper imports.

Additional Notes:Predatory Pricing – it is defined as pricing below an appropriate measure of cost for the purpose of eliminating competitors in the short run and reducing competition in a long run.

· Normal price cut simply increasing the market share, whereas Predatory pricing eliminate the competition and creates monopoly.

· Consumers may benefit for short run, but once this scheme succeeds in eliminating competition it may results in price rise and decline in choices.

Active Pharmaceutical Ingredient (API) – also called as Bulk Drugs, are significant ingredients in the manufacture of drugs.

Bulk drug parks Scheme –· The government aims to develop 3 mega bulk drug parks in India in partnership

with states.

· Objective – to reduce manufacturing cost of bulk drugs in the country and dependency on other countries for such imports.

· Implemented by State Implementing Agency to be set up by the respective State Governments

Production-Linked Incentive (PLI) scheme – · Financial incentives will be given to eligible manufacturers of identified 53 critical bulk

drugs on their incremental sales over the base year (2019-2020) for a period of 6 years.

· Objective – to promote domestic manufacturing of critical Key Starting Materials (KSMs)/Drug Intermediates and APIs in the country by giving financial incentives on sales

· Implemented through a Project Management Agency (PMA) to be nominated by the Department of Pharmaceuticals

SEPTEMBER


18. Ease of Doing BusinessContext: The Department for Promotion of Industry and Internal Trade (DPIIT) released the 4th edition of Ease of Doing Business (EoDB) ranking based on the Business Reform Action Plan (BRAP) ranking of states.

Key highlights:· Andhra Pradesh secured the top spot for the 3rd time since the ranking was 1st released

in 2015.

· UP jumped ten spots to number 2 and Telangana slipped to three.

· Gujarat which was 1st in first year edition of the rankings, was ranked 10 this year

· Haryana slipped all the way to 17.

How states are ranked?· Ranking of the States based on the implementation of BRAP started in the year 2015.

· Till date, State rankings have been released for the years 2015, 2016 and 2017-2018.

· The BRAP 2018-2019 includes 187 reform points covering 12 business regulatory areas such as Access to Information, Single Window System, Labour, Environment, etc.

· The larger objective of attracting investments and increasing EoDB in each State was sought to be achieved by introducing an element of healthy competition through a system of ranking states based on their performance in the implementation of BRAP.

· Reforms that DPIIT recommended –

Ø Single Window System – all states should have a single window system that provides all necessary information on permits licences required for starting a business.

Ø To reduce delays, it recommends that the duration of licenses be extended or that they be renewed automatically based on self-certification or 3rd party verification.

Ø A state is also rewarded if a set of regulations (like labour or environment laws) are not applicable to it.

· Earlier edition was based on the responses of the relevant state government departments.

o But this time it gives full weightage to the feedback from over 30000 respondents at the ground level, who gave their opinion about the effectiveness of the reforms.

· States are required to submit proof of implementing each reform on the DPIIT’s EoDB portal and submit a list of users of these reforms.

· A sample of these users is then surveyed to determine the efficacy of these reforms.

Why were these rankings criticized?· The absence of more industrialized states such as Tamil Nadu and Maharashtra from

the top rungs and the presence of states such as Uttar Pradesh in the top ranks.

· DPIITs methodology does not consider the actual number of reforms implemented by the states. (as in Table 2)

SEPTEMBER


o For instance, States like Haryana and Gujarat have implemented all the reforms recommended by the DPIIT, but were ranked low on the EoDB list.

· DPIITs methodology awards points on a reform to a state only if there was an adequate response from users of that response.

eg - Gujarat has reportedly attributed the low ranking to poor response from the survey respondents.

o The number of respondents for every state should be decided based on population or number of business cluster to ensure that the samples is representative of the state. It is not clear if DPIIT used representative samples.

How do these reforms affect investments?· An analysis by CARE ratings shows that “the top-ranking states in terms of EoDB have

not necessarily been associated with higher shares of new investments announced during the year”.

o Table 3 shows, except for Andhra Pradesh, the top-ranking states as per these rankings do not have high shares in the total investment during the year.

· This is because businesses respond to other conditions like the availability of skilled labour, infrastructure, finance, etc.

19. GOVT DATABASE FOR INFORMAL WORKFORCEContext· Ministry of Labor and Employment, in a written reply to Rajya Sabha, has stated that a

National Database of the Unorganized Workforce (including migrant labors) will be created.

o Profiles of informal workers will be seeded using Aadhaar.

News Highlights· Following the mass reverse migration of workers during COVID lockdown, this is the 1st time

Government has expressed its intention to create a database for informal workers.

· Existing Interstate Migrant Workmen (Regulation of Employment and Conditions of Service) Act 1979, has been merged into The Occupation Safety, Health and Working Conditions Code 2019 (pending to be passed in Rajya Sabha).

o Act is

Documents

New AIA's · 2020. 10. 21. · [email protected] SARVA RASATMIKA (a treatise for Future officers) AIA's SEPTEMBER 2020 Coverage: MONTHLY CURRENT AFFAIRS SARVA RASATMIKA Sources: